County Bancorp, Inc. Announces Record Earnings for the Third Quarter of 2019

Highlights

  • Record net income of $5.7 million for the third quarter of 2019; $13.1 million for the nine months ended September 30, 2019
  • Diluted earnings per share of $0.82 for the third quarter of 2019; $1.89 for the nine months ended September 30, 2019
  • Book value per share of $23.89 as of September 30, 2019, an increase of $0.86, or 3.7%, since June 30, 2019, and an increase of $2.39, or 11.1%, since December 31, 2018
  • Adverse classified asset ratio improved to 45.67% at September 30, 2019 from 53.21% at June 30, 2019.
  • Non-performing assets decreased $0.8 million, an improvement of 2.6%, since June 30, 2019, and decreased $7.7 million, or 21.6%, since September 30, 2018
  • Client deposits (demand deposits, money market accounts, and certificates of deposit) increased $19.1 million, or 2.4%, since June 30, 2019, and increased $100.2 million, or 13.9%, since September 30, 2018.
  • Brokered and national deposits decreased $81.5 million during the third quarter of 2019, a reduction of 20.1%, and decreased $166.2 million, or 33.9%, since September 30, 2018

MANITOWOC, Wis., Oct. 17, 2019 (GLOBE NEWSWIRE) — County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), an agricultural and commercial community bank headquartered in Manitowoc, Wisconsin, reported net income of $5.7 million, or $0.82 diluted earnings per share, for the third quarter of 2019, compared to net income of $3.7 million, or $0.53 diluted earnings per share, for the second quarter of 2019 and $3.5 million, or $0.50 diluted earnings per share, for the third quarter of 2018.  This represents an annualized return on average assets of 1.57% for the three months ended September 30, 2019, compared to 0.94% for the three months ended September 30, 2018.  The annualized return on average assets for the nine months ended September 30, 2019 was 1.19% compared to 1.04% for the same period of 2018.  Third quarter earnings were largely impacted by a credit to provision for loan losses of $1.2 million for third quarter of 2019 compared to a $0.9 million provision expense for the second quarter of 2019, and a $1.0 million provision expense for the third quarter of 2018.

“We are very pleased with the improvement we have seen in our credit portfolio this quarter,” stated Tim Schneider, President of the Company and CEO of the Bank.  “We continue to see an improved milk price environment: the 12-month forward looking average for class III milk increased from $15.88 to $17.12 per hundredweight on the Chicago Mercantile Exchange from December 31, 2018 to September 30, 2019. These trends are encouraging, but still have work to do to continue to improve our asset quality.”

Schneider continued, “As previously announced, we are still committed to reducing our wholesale funding.  We were able to make significant progress this quarter and year-over-year, primarily through the additional liquidity from selling loan participations, which has also led to solid growth in our loan servicing income. We are also very pleased with our client deposit growth year-over-year and during the quarter.”

Loans and Total Assets

Total assets at September 30, 2019 were $1.4 billion, a decrease of $69.7 million, or 4.7%, and a decrease of $100.0 million, or 6.6%, over total assets as of June 30, 2019 and September 30, 2018, respectively.  Total loans were $1.1 billion at September 30, 2019, which represents a $67.0 million, or 5.8%, decrease over total loans at June 30, 2019, and a decrease of $122.2 million, or 10.2%, over total loans at September 30, 2018.

The decrease in total loans and assets was the result of our continued focus on reducing loans on our balance sheet through the sale of loan participations during 2019.  Participated loans that the Company continued to service were $736.8 million at September 30, 2019, which was an increase of $41.2 million, or 5.9%, and $91.9 million, or 14.3%, over participated loans that the Company serviced at June 30, 2019 and September 30, 2018, respectively.  By increasing the amount of loans participated, the Company is reducing credit risk from its balance sheet and increasing non-interest revenue streams.

Deposits

Total deposits at September 30, 2019 were $1.1 billion, a decrease of $62.4 million, or 5.2%, and a decrease of $66.0 million, or 5.5%, over total deposits as of June 30, 2019 and September 30, 2018, respectively.  Despite the decline in total deposits, client deposits (demand deposits, money market accounts, and certificates of deposit) increased $19.1 million, or 2.4%, since June 30, 2019, and increased $100.2 million, or 13.9%, since September 30, 2018. 

Due to the increases in loan participations and client deposit growth, the Company was able to further decrease its reliance on brokered deposits and national certificates of deposit to $324.5 million at September 30, 2019.  This represents a decrease of $81.5 million, or 20.1%, from June 30, 2019, and a decrease of $166.2 million, or 33.9%, from September 30, 2018. 

During the third quarter of 2019, the Company continued to pay off portions of its FHLB borrowings.  At September 30, 2019, borrowings from the FHLB totaled $44.4 million, which was a decrease of $15.0 million, or 25.3%, from June 30, 2019, and a decrease of $58.0 million, or 56.6%, from September 30, 2018.

Net Interest Income and Margin

Net interest income was $10.3 million for the three months ended September 30, 2019, which was a $0.1 million, or 1.7%, decrease from the three months ended June 30, 2019, and a $0.4 million, or 3.3%, decrease from the three months ended September 30, 2018.  The decrease in net interest income quarter-over-quarter and year-over-year was the result of a lower average loan balance due to loan payoffs and the increase in loan participations discussed above.

Net interest margin was 2.95% for the three months ended September 30, 2019, which was an increase from 2.92% for the three months ended June 30, 2019, and an increase from 2.89% for the three months ended September 30, 2018.  The increase in net interest margin over the linked quarter was primarily due to a decline in average loans from loan participation sales that took place primarily the last half of the quarter.  Year-over-year third quarter net interest margin increased by six basis points primarily due to a 32 basis point increase in loan yields, which was partially offset by a 29 basis point increase in cost of funds.

     
  For the Three Months Ended  
  September 30, 2019     June 30, 2019     September 30, 2018  
  Average
Balance (1)
    Income/
Expense
    Yields/
Rates
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
 
                                                                       
  (dollars in thousands)  
Assets                                                                      
Investment securities $ 159,091     $ 1,117       2.81 %   $ 176,237     $ 1,259       2.86 %   $ 189,448     $ 1,289       2.72 %
Loans (2)   1,126,243       15,030       5.34 %     1,177,071       15,484       5.26 %     1,204,122       15,113       5.02 %
Interest bearing deposits due from other banks   104,253       612       2.35 %     73,769       465       2.52 %     62,560       249       1.59 %
Total interest-earning assets $ 1,389,587     $ 16,759       4.82 %   $ 1,427,077     $ 17,208       4.82 %   $ 1,456,130     $ 16,651       4.57 %
                                                                       
Allowance for loan losses   (16,209 )                     (17,782 )                     (15,445 )                
Other assets   78,664                       76,806                       58,921                  
Total assets $ 1,452,042                     $ 1,486,101                     $ 1,499,606                  
                                                                       
Liabilities                                                                      
Savings, NOW, money market, interest checking $ 326,592     $ 1,276       1.56 %   $ 315,940     $ 1,316       1.67 %   $ 276,468     $ 907       1.31 %
Time deposits   745,032       4,298       2.31 %     770,554       4,363       2.26 %     830,168       4,073       1.96 %
Total interest-bearing deposits $ 1,071,624     $ 5,574       2.08 %   $ 1,086,494     $ 5,679       2.09 %   $ 1,106,636     $ 4,980       1.80 %
Other borrowings   804       9       4.60 %     1,204       13       4.47 %     839       10       4.61 %
FHLB advances   48,857       237       1.94 %     78,653       401       2.04 %     92,443       401       1.74 %
Junior subordinated debentures   44,800       687       6.14 %     44,762       683       6.11 %     44,659       656       5.88 %
Total interest-bearing liabilities $ 1,166,085     $ 6,507       2.23 %   $ 1,211,113       6,776       2.24 %   $ 1,244,577     $ 6,047       1.94 %
                                                                       
Non-interest-bearing deposits   105,578                       102,432                       97,947                  
Other liabilities   14,801                       12,154                       9,136                  
Total liabilities $ 1,286,464                     $ 1,325,699                     $ 1,351,660                  
                                                                       
Shareholders’ equity   165,578                       160,402                       147,946                  
Total liabilities and equity $ 1,452,042                     $ 1,486,101                     $ 1,499,606                  
                                                                       
Net interest income         $ 10,252                     $ 10,432                     $ 10,604          
Interest rate spread (3)                   2.59 %                     2.58 %                     2.63 %
Net interest margin (4)                   2.95 %                     2.92 %                     2.89 %
Ratio of interest-earning assets to interest-bearing liabilities   1.19                       1.18                       1.17                  
 
(1)  Average balances are calculated on amortized cost.
(2)  Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
(3)  Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4)  Net interest margin represents net interest income divided by average total interest-earning assets.
 

Net interest income for the nine months ended September 30, 2019 was $31.2 million which was the same as to the nine month ended September 30, 2018, primarily as a result of the combination of a higher average loan yield on a smaller average balance of the loan portfolio.

For the nine months ended September 30, 2019, net interest margin improved slightly to 2.94% from 2.92% for the nine months ended September 30, 2018, primarily as a result of a 40 basis point increase in loan yields that was partially offset by a 46 basis point increase in cost of funds.

Non-Interest Income and Expense

Non-interest income for the three months ended September 30, 2019 increased by $1.1 million, or 39.7%, to $4.0 million compared to the three months ended June 30, 2019, which was primarily the result of an increase of $1.4 million of loan servicing right origination due to the $41.2 million in loans that were sold or participated during the third quarter.  The Company also continued to reduce the valuation allowance on its loan servicing rights portfolio which resulted in an additional servicing rights income of $0.2 million.   

Non-interest income for the three months ended September 30, 2019 increased $1.9 million, or 87.0%, compared to $2.2 million for the three months ended September 30, 2018.  The year-over-year increase was primarily due to the increase in loan participations discussed above.

       
    For the Three Months Ended 
    September 30,
2019
  June 30,
2019
  March 31,
2019
    December 31,
2018
    September 30,
2018
 
                                       
    (dollars in thousands, except per share data)
Non-Interest Income                                      
Services charges   $ 348   $ 407     $ 353     $ 470     $ 394  
Gain (loss) on sale of loans, net     87     26       (1 )     54       41  
Loan servicing fees     1,677     1,563       1,519       1,553       1,521  
Loan servicing right origination     1,741     346       228       7       (46 )
Income on OREO     10     40       26       83       96  
Gain on sale of securities         341                    
Other     171     164       625       153       151  
Total non-interest income   $ 4,034   $ 2,887     $ 2,750     $ 2,320     $ 2,157  
                                       

For the nine months ended September 30, 2019, non-interest income improved to $9.7 million, an increase of $3.2 million, or 48.5%, over the nine months ended September 30, 2018.  The increase was primarily due to the increase in servicing fees as the result of the reduction of the servicing right valuation allowance totaling $0.8 million and the increase in fees generated by the $91.9 million of loans that were participated since September 30, 2018.  In addition, the Company eliminated its allowance for unused commitments, which resulted in an increase of $0.5 million in other non-interest income.  The Company evaluated the need for this allowance during the first quarter of 2019 and concluded there was not sufficient evidence that represented credit loss inherent in these commitments to substantiate the necessity of this reserve and concluded to eliminate it.  The Company will continue to evaluate credit risk on these off-balance sheet commitments. 

Non-interest expense for the three months ended September 30, 2019 increased by $0.2 million, or 3.0%, to $7.7 million compared to the three months ended June 30, 2019, and increased $0.6 million, or 9.2%, compared to the three months ended September 30, 2018.  Employee compensation and benefits increased $0.5 million, or 12.8%, in the linked quarter due in part to additional accrual of $0.3 million for incentive compensation related to anticipated current year financial results.  The increased employee compensation and benefits was partially offset by a $0.2 million small bank assessment credit that was received from the FDIC, which reduced other non-interest expense.  This one-time credit was awarded to banks with total assets less than $10 billion due to the FDIC’s Reserve fund exceeding its target balance.  The year-over-year increase was due in part to a $0.2 million loss on the sale an OREO property during the third quarter of 2019 and small increases in information processing, professional fees, and business development.

    For the Three Months Ended  
    September 30,
2019
  June 30,
2019
    March 31,
2019
    December 31,
2018
    September 30,
2018
 
                                     
    (dollars in thousands, except per share data)  
Non-Interest Expense                                    
Employee compensation and benefits   $ 4,735     $ 4,199     $ 4,482     $ 4,059     $ 4,394  
Occupancy     313       283       389       245       332  
Information processing     683       591       563       641       529  
Professional fees     483       417       399       497       351  
Business development     351       347       325       259       258  
OREO expenses     57       121       51       106       46  
Writedown of OREO           250             688       81  
Net loss (gain) on sale of OREO     160       9       (136 )     (54 )     (28 )
Depreciation and amortization     319       328       337       408       302  
Other     567       901       895       689       758  
Total non-interest expense   $ 7,668     $ 7,446     $ 7,305     $ 7,538     $ 7,023  
                                         

Asset Quality

At September 30, 2019, non-performing assets were $28.0 million, a decrease of $0.8 million, or 2.6%, and $7.7 million, or 21.6%, compared to June 30, 2019 and September 30, 2018, respectively.  Non-performing assets as a percent of total assets increased to 1.98% at September 30, 2019, from 1.94% at June 30, 2019, due to the reduction in total assets and decreased from 2.36% at September 30, 2018.  During the third quarter of 2019, two OREO properties were sold, resulting in a decrease of $1.4 million in OREO.

Substandard loans were $105.9 million at September 30, 2019, compared to $117.8 million at June 30, 2019 and $118.4 million at September 30, 2018.  Adverse classified asset ratio (a non-GAAP measure) decreased to 45.67% at September 30, 2019 from 53.21% and 51.89% at June 30, 2019 and September 30, 2018, respectively.  The decrease in substandard loans and the adverse classified ratio was in part the result of a combination of an improving milk price outlook and concerted efforts by our dairy customers to manage their expenses wherever they reasonably can.  We are actively managing these credits, and we are optimistic about the industry’s outlook as there was a 4.7% increase in the 12-month future price of class III milk on the Chicago Mercantile Exchange from June 30, 2019 to September 30, 2019.

A credit to provision for loan losses of $1.2 million was recorded for the three months ended September 30, 2019 compared to a provision of $0.9 million for the three months ended June 30, 2019, and a provision of $1.0 million for the three months ended September 30, 2018.  For the nine months ended September 30, 2019, a provision for loan losses was $0.5 million compared to $1.6 million for the nine months ended September 30, 2018.  The decrease in provision in the linked quarter and year-over- year was directly related to the decrease in the dairy loan portfolio as the result of the increase in loan participations, improvements in milk price, and upgrade to credit ratings.  The upgrade of $26.1 million of substandard performing and special mention loans to the watch risk category in the third quarter resulted in $0.8 million reduction to the allowance for loan losses. 

                     
    September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
  September 30,
2018
                                         
    (dollars in thousands)  
Loans by risk category:                                        
Sound/Acceptable/Satisfactory/Low Satisfactory   $ 771,568     $ 836,988     $ 896,328     $ 908,172     $ 901,643  
Watch     193,942       167,824       174,642       171,670       171,890  
Special Mention     9,346       25,255       4,501       6,566       11,036  
Substandard Performing     44,183       56,336       46,075       65,501       61,851  
Substandard Impaired     61,728       61,429       61,417       55,386       56,517  
Total loans   $ 1,080,767     $ 1,147,832     $ 1,182,963     $ 1,207,295     $ 1,202,937  
                                         

The allowance for loan losses was $15.1 million at September 30, 2019 compared to $16.5 million at December 31, 2018.  The $1.4 million decrease in the allowance during the first nine months of 2019 was the result of a reduction in general reserves due to the decreases in total loans and the credit upgrades discussed previously.

Conference Call

The Company will host an earnings call tomorrow, October 18, 2019, at 8:30 a.m., CDT, conducted by Timothy J. Schneider, President, and Glen L. Stiteley, CFO.  The earnings call will be broadcast over the Internet on the Company’s website at http://investors.icbk.com.  From the top menu, select “News”, then “Event Calendar.”  In addition, you may listen to the Company’s earnings call via telephone by dialing (844) 835-9984.  Investors should visit the Company’s website or call in to the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.  

A replay of the earnings call will be available until October 18, 2020, by visiting the Company’s website at http://investors.icbk.com.

About County Bancorp, Inc.

County Bancorp, Inc., a Wisconsin corporation and registered bank holding company founded in May 1996, and its wholly-owned subsidiary Investors Community Bank, a Wisconsin-chartered bank, are headquartered in Manitowoc, Wisconsin.  The state of Wisconsin is often referred to as “America’s Dairyland,” and one of the niches it has developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending.  It also serves business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin.  Its customers are served from its full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and its loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Investor Relations Contact
Glen L. Stiteley
EVP – CFO, Investors Community Bank
Phone: (920) 686-5658
Email: [email protected]     

                               
                               
County Bancorp, Inc.
Consolidated Financial Summary
(Unaudited)
  September 30,
2019 
  June 30,
2019 
  March 31,
2019 
  December 31,
2018 
  September 30,
2018 
                                         
    (dollars in thousands, except per share data)  
Period-End Balance Sheet:                                        
Assets                                        
Cash and cash equivalents   $ 120,845     $ 116,251     $ 62,426     $ 61,087     $ 49,996  
Securities available for sale, at fair value     154,962       158,561       192,210       195,945       190,185  
Loans held for sale     4,192       7,448       2,750       2,949       13,770  
Agricultural loans     673,742       713,602       722,107       724,508       714,310  
Commercial loans     360,132       383,542       403,490       415,672       417,146  
Multi-family real estate loans     43,487       46,683       52,974       62,321       66,403  
Residential real estate loans     3,183       3,753       4,172       4,522       4,965  
Installment and consumer other     223       252       220       272       113  
Total loans     1,080,767       1,147,832       1,182,963       1,207,295       1,202,937  
Allowance for loan losses     (15,065 )     (16,258 )     (17,493 )     (16,505 )     (16,143 )
Net loans     1,065,702       1,131,574       1,165,470       1,190,790       1,186,794  
Other assets     69,263       70,812       68,532       70,256       74,223  
Total Assets   $ 1,414,964     $ 1,484,646     $ 1,491,388     $ 1,521,027     $ 1,514,968  
                                         
Liabilities and Shareholders’ Equity                                        
Demand deposits   $ 117,224     $ 111,022     $ 101,434     $ 121,436     $ 103,862  
NOW accounts and interest checking     56,637       54,253       49,902       51,779       46,811  
Savings     6,981       6,621       6,210       5,770       6,616  
Money market accounts     248,608       239,337       225,975       218,929       208,233  
Time deposits     388,759       387,899       376,034       356,484       352,531  
Brokered deposits     206,474       256,475       269,917       308,504       317,291  
National time deposits     118,070       149,570       146,805       160,445       173,440  
Total deposits     1,142,753       1,205,177       1,176,277       1,223,347       1,208,784  
FHLB advances     44,400       59,400       100,400       89,400       102,400  
Subordinated debentures     44,820       44,781       44,742       44,703       44,663  
Other liabilities     14,239       12,564       11,952       11,492       11,134  
Total Liabilities     1,246,212       1,321,922       1,333,371       1,368,942       1,366,981  
                                         
Shareholders’ equity     168,752       162,724       158,017       152,085       147,987  
Total Liabilities and Shareholders’ Equity   $ 1,414,964     $ 1,484,646     $ 1,491,388     $ 1,521,027     $ 1,514,968  
                                         
Stock Price Information:                                        
High – Quarter-to-date   $ 20.99     $ 18.92     $ 19.69     $ 26.00     $ 28.20  
Low – Quarter-to-date   $ 16.80     $ 16.24     $ 16.74     $ 17.37     $ 24.29  
Market price – Quarter-end   $ 19.62     $ 17.09     $ 17.60     $ 17.37     $ 25.10  
Book value per share   $ 23.89     $ 23.03     $ 22.36     $ 21.50     $ 20.91  
Tangible book value per share (1)   $ 23.10     $ 22.23     $ 21.54     $ 20.68     $ 20.07  
Common shares outstanding     6,727,908       6,717,908       6,709,254       6,709,480       6,694,230  
 
(1)  This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.
 
    September 30,
2019
  June 30,
2019 
  March 31,
2019 
  December 31,
2018 
  September 30,
2018 
                                     
    (dollars in thousands)  
Loans by risk category:                                    
Sound/Acceptable/Satisfactory/Low Satisfactory   $ 771,568     $ 836,988     $ 896,328     $ 908,172     $ 901,643  
Watch     193,942       167,824       174,642       171,670       171,890  
Special Mention     9,346       25,255       4,501       6,566       11,036  
Substandard Performing     44,183       56,336       46,075       65,501       61,851  
Substandard Impaired     61,728       61,429       61,417       55,386       56,517  
Total loans     1,080,767       1,147,832       1,182,963       1,207,295       1,202,937  
Loans sold with servicing retained     736,823       695,629       675,268       661,257       644,879  
Total loans and loans sold with servicing retained   $ 1,817,590     $ 1,843,461     $ 1,858,231     $ 1,868,552     $ 1,847,816  
                                         
Non-Performing Assets:                                        
Nonaccrual loans   $ 20,776     $ 20,096     $ 25,880     $ 22,983     $ 27,881  
Other real estate owned (1)     7,252       8,693       5,019       6,568       7,851  
Total non-performing assets   $ 28,028     $ 28,789     $ 30,899     $ 29,551     $ 35,732  
                                         
Performing TDRs not on nonaccrual   $ 28,520     $ 28,892     $ 21,111     $ 18,258     $ 11,863  
                                         
Non-performing assets as a % of total loans     2.59 %     2.51 %     2.61 %     2.45 %     2.97 %
Non-performing assets as a % of total assets     1.98 %     1.94 %     2.07 %     1.94 %     2.36 %
Adverse classified asset ratio (2)     45.67 %     53.21 %     48.59 %     57.12 %     51.89 %
Allowance for loan losses as a % of nonaccrual loans     72.51 %     80.90 %     67.59 %     71.81 %     57.90 %
Allowance for loan losses as a % of total loans     1.39 %     1.42 %     1.48 %     1.37 %     1.34 %
Net charge-offs (recoveries) quarter-to-date   $ 39     $ 2,111     $ (236 )   $ 1,210     $ (21 )
Provision for loan loss quarter-to-date   $ (1,154 )   $ 876     $ 752     $ 1,572     $ 993  
 
(1) The quarter ended September 30, 2018, does not include $0.4 million of bank property transferred from premises and equipment, which is not considered a non-performing asset.  For the quarter ended December 31, 2018, and all subsequent quarters, that bank property was considered classified due to the length of the holding period.
(2) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.
 
    For the Three Months Ended  
    September 30,
2019 
  June 30,
2019 
  March 31,
2019 
  December 31,
2018 
  September 30,
2018 
                                         
    (dollars in thousands, except per share data)  
Selected Income Statement Data:                                        
Interest and Dividend Income                                        
Loans, including fees   $ 15,030     $ 15,484     $ 15,501     $ 15,536     $ 15,113  
Taxable securities     1,117       1,177       1,186       1,168       945  
Tax-exempt securities           82       175       183       344  
Federal funds sold and other     612       465       264       223       249  
Total interest and dividend income     16,759       17,208       17,126       17,110       16,651  
                                         
Interest Expense                                        
Deposits     5,574       5,678       5,424       5,273       4,980  
FHLB advances and other borrowed funds     246       415       464       427       411  
Subordinated debentures     687       683       678       667       656  
Total interest expense     6,507       6,776       6,566       6,367       6,047  
Net interest income     10,252       10,432       10,560       10,743       10,604  
Provision for loan losses     (1,154 )     876       752       1,572       993  
Net interest income after provision for loan losses     11,406       9,556       9,808       9,171       9,611  
                                         
Non-Interest Income                                        
Services charges     348       407       353       470       394  
Gain (loss) on sale of loans, net     87       26       (1 )     54       41  
Loan servicing fees     1,677       1,563       1,519       1,553       1,521  
Loan servicing right origination     1,741       346       228       7       (46 )
Income on OREO     10       40       26       83       96  
Gain on sale of securities           341                    
Other     171       164       625       153       151  
Total non-interest income     4,034       2,887       2,750       2,320       2,157  
                                         
Non-Interest Expense                                        
Employee compensation and benefits     4,735       4,199       4,482       4,059       4,394  
Occupancy     313       283       389       245       332  
Information processing     683       591       563       641       529  
Professional fees     483       417       399       497       351  
Business development     351       347       325       259       258  
OREO expenses     57       121       51       106       46  
Writedown of OREO           250             688       81  
Net loss (gain) on sale of OREO     160       9       (136 )     (54 )     (28 )
Depreciation and amortization     319       328       337       408       302  
Other     567       901       895       689       758  
Total non-interest expense     7,668       7,446       7,305       7,538       7,023  
Income before income taxes     7,772       4,997       5,253       3,953       4,745  
Income tax expense     2,090       1,293       1,491       1,123       1,228  
NET INCOME   $ 5,682     $ 3,704     $ 3,762     $ 2,830     $ 3,517  
                                         
Basic   $ 0.82     $ 0.53     $ 0.54     $ 0.41     $ 0.51  
Diluted   $ 0.82     $ 0.53     $ 0.54     $ 0.40     $ 0.50  
Dividends declared   $ 0.05     $ 0.05     $ 0.05     $ 0.07     $ 0.07  
     For the Three Months Ended  
    September 30,
2019 
  June 30,
2019 
  March 31,
2019 
  December 31,
2018 
  September 30,
2018 
                                         
    (dollars in thousands, except share data)  
Other Data:                                        
Return on average assets(1)     1.57 %     1.00 %     1.00 %     0.75 %     0.94 %
Return on average shareholders’ equity(1)     13.73 %     9.24 %     9.78 %     7.58 %     9.51 %
Return on average common shareholders’ equity (1)(2)     14.14 %     9.41 %     9.99 %     7.70 %     9.75 %
Efficiency ratio (1)(2)     52.55 %     55.38 %     55.91 %     52.85 %     55.39 %
Tangible common equity to tangible assets (2)     11.03 %     10.10 %     9.73 %     9.15 %     8.90 %
                                         
Common Share Data:                                        
Net income from continuing operations   $ 5,682     $ 3,704     $ 3,762     $ 2,830     $ 3,517  
Less:  Preferred stock dividends     120       118       117       111       106  
Income available to common shareholders   $ 5,562     $ 3,586     $ 3,645     $ 2,719     $ 3,411  
                                         
Weighted average number of common shares issued     7,168,785       7,159,072       7,153,174       7,177,212       7,108,202  
Less: Weighted average treasury shares     443,920       443,920       443,729       442,206       443,140  
Less: Weighted average non-vested restricted units awards     32,125       30,483       16,260       30,955       29,537  
Weighted average number of common shares outstanding     6,756,990       6,745,635       6,712,551       6,704,051       6,694,599  
Effect of dilutive options     19,160       20,731       21,323       68,876       63,346  
Weighted average number of common shares outstanding used
to calculate diluted earnings per common share
    6,776,150       6,766,366       6,733,874       6,772,927       6,757,945  
                                         
(1)  Annualized
(2) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.
 
     For the Three Months Ended
Non-GAAP Financial Measures:   September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
  September 30,
2018
                                     
    (dollars in thousands)  
Return on average common shareholders’ equity reconciliation:                                        
Return on average shareholders’ equity     13.73 %     9.24 %     9.78 %     7.58 %     9.51 %
Effect of excluding average preferred shareholders’ equity     0.41 %     0.17 %     0.21 %     0.12 %     0.24 %
Return on average common shareholders’ equity     14.14 %     9.41 %     9.99 %     7.70 %     9.75 %
                                         
Efficiency ratio GAAP to non-GAAP reconciliation:                                        
Non-interest expense   $ 7,668     $ 7,446     $ 7,305     $ 7,538     $ 7,023  
Less: net gain (loss) on sales and write-downs of OREO     (160 )     (259 )     136       (634 )     45  
Adjusted non-interest expense (non-GAAP)   $ 7,508     $ 7,187     $ 7,441     $ 6,904     $ 7,068  
                                         
Net interest income   $ 10,252     $ 10,432     $ 10,560     $ 10,743     $ 10,604  
Non-interest income     4,034       2,887       2,750       2,320       2,157  
Less: net gain on sales of securities           (341 )                  
Operating revenue   $ 14,286     $ 12,978     $ 13,310     $ 13,063     $ 12,761  
Efficiency ratio     52.55 %     55.38 %     55.91 %     52.85 %     55.39 %
                                         

               

    September 30,
2019 
  June 30,
2019 
  March 31,
2019 
  December 31,
2018 
  September 30,
2018 
                                     
    (dollars in thousands, except per share data)  
Tangible book value per share and tangible common equity to tangible assets reconciliation:                                        
Common equity   $ 160,752     $ 154,724     $ 150,017     $ 144,284     $ 139,987  
Less: Goodwill     5,038       5,038       5,038       5,038       5,038  
Less: Core deposit intangible, net of amortization     286       354       430       513       603  
Tangible common equity (non-GAAP)   $ 155,428     $ 149,332     $ 144,549     $ 138,733     $ 134,346  
Common shares outstanding     6,727,908       6,717,908       6,709,254       6,709,480       6,694,230  
Tangible book value per share   $ 23.10     $ 22.23     $ 21.54     $ 20.68     $ 20.07  
                                         
Total assets   $ 1,414,964     $ 1,484,646     $ 1,491,388     $ 1,521,027     $ 1,514,968  
Less: Goodwill     5,038       5,038       5,038       5,038       5,038  
Less: Core deposit intangible, net of amortization     286       354       430       603       701  
Tangible assets (non-GAAP)   $ 1,409,640     $ 1,479,254     $ 1,485,920     $ 1,515,386     $ 1,509,229  
Tangible common equity to tangible assets     11.03 %     10.10 %     9.73 %     9.15 %     8.90 %
                                         
Adverse classified asset ratio:                                        
Substandard loans   $ 105,911     $ 117,765     $ 107,492     $ 120,887     $ 118,368  
Less: Impaired performing restructured loans     (8,672 )     (8,276 )     (6,382 )     (5,078 )     (13,657 )
Net substandard loans   $ 97,239     $ 109,489     $ 101,110     $ 115,809     $ 104,711  
Other real estate owned     7,252       8,693       5,019       6,568       7,851  
Substandard unused commitments     991       1,458       976       1,625       1,191  
Less: Substandard government guarantees     (7,746 )     (7,821 )     (5,864 )     (7,111 )     (9,374 )
Total adverse classified assets (non-GAAP)   $ 97,736     $ 111,819     $ 101,241     $ 116,891     $ 104,379  
                                         
Total equity (Bank)   $ 201,967     $ 196,036     $ 191,287     $ 185,458     $ 180,359  
Accumulated other comprehensive loss (gain) on available for sale securities     (3,016 )     (2,166 )     (436 )     2,221       4,152  
Allowance for loan losses     15,065       16,258       17,493       16,505       16,143  
Allowance for unused commitments                       475       510  
Adjusted total equity (non-GAAP)   $ 214,016     $ 210,128     $ 208,344     $ 204,659     $ 201,164  
Adverse classified asset ratio     45.67 %     53.21 %     48.59 %     57.12 %     51.89 %

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